Regional housing affordability tipped to fall again

New figures show the improving economy has caused first homes in regional Victoria to become significantly less affordable.

The Housing Industry Association's data shows regional Victoria had the second biggest proportional fall in affordability in Australia, during the first three months of this year.

The association's affordability index uses average incomes and first home buyer house prices and is 25 per cent lower in regional Victoria compared with 12 months ago.

The association's senior economist, Ben Phillips, says the problem is likely to worsen later this year.

"Up til the March quarter we only had one raise in interest rates in 2010 but of course in April and May the Reserve Bank jacked up rates again, so in the next quarter - or the June quarter release - we'll certainly see a larger drop in affordability," he said.